A new twist on gift card scams is starting to haunt consumers

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One thing you can do is choose a card from the back of the rack

For years, consumers have been warned about gift card scams, but now there’s a whole new gift card headache – the actual racks that hold those gift cards at a retail store. A leading cybercrime organization says that those racks are often the targets of financial schemers hoping to make a quick buck. 

It's bad enough as it is. Americans reported $228.1 million in losses to gift card-related scams alone in 2022, per the FTC Consumer Sentinel. A leading cybercrime nonprofit organization, Cybercrime Support Network, CSN, sponsored by Target, CapitalOne, Comcast and Google, is now using its resources to help Americans report and combat this crisis before it gets even further out of control.

How one gift card giver wound up giving a gift card worth nothing

According to CSN, bad actors will tamper with a gift card on a rack by recording the activation code on the card which they can then turn into cash or credit by going online and activating – and without the person who actually buys the card ever knowing it.

A real-life example comes from the Detroit Free Press, which tells the story of the Pfeiffer family who were victimized by one of these rack schemes. It all began when Dina Pfeiffer’s brother bought her son two Visa gift cards worth $400 for his high school graduation. 

But when she went online the next day to make sure she was up to date on any rules or restrictions her son might face using the new card, she found out that one of the cards had been compromised and completely drained. She said she was so stunned that she woke up her son who was still sleeping to ask him if he had already spent the money on that Visa card. 

"Gift cards can be a convenient and practical way to give a gift, but consumers should be aware that display rack gift card scams are a serious issue that can have a significant impact. Not only can they result in financial losses, but they can also cause emotional distress and frustration," Robert Burda, CSN's CEO, told ConsumerAffairs. "Remember, taking a few extra moments to examine a gift card before making a purchase can save you a lot of trouble in the long run."

Protect yourself from getting a compromised gift card

CSN told ConsumerAffairs that you can avoid these gift card schemes by checking the packaging. 

“Look for signs of tampering, such as the wrapping being torn or resealed. Also, look for stickers placed over the barcode or card number,” CSN said. “Scammers will place a custom barcode sticker over the real barcode of the gift card, which allows them to secretly load the cash onto their own card immediately after you purchase the gift card.”

Other tips CSN offered include:

  • Choose a card from the back of the rack: Scammers often place their fraudulent cards at the front of the display, so choosing a card from the back can reduce the risk of purchasing a tampered card.

  • Purchase gift cards that are in view of the cashier: Gift cards that are in view of the cashier can be a safer option because they are less likely to be tampered with. Additionally, if the gift card is kept behind the counter or in a locked display case, it can provide an extra layer of protection against tampering.

  • Avoid unfamiliar brands: If you're not familiar with the brand on the gift card, do some research before purchasing. Some scammers create fake gift cards for non-existent or defunct brands, so it's important to be cautious.

  • Report suspicious activity: If you suspect that a gift card is fraudulent or has been tampered with, the CSN analysts say that you should report it to a store associate right away and request a refund or exchange. Plus, it should be reported to the Federal Trade Commission (FTC), as well as asking the company that issued the gift card to have it re-issued. 

The FTC also provides a list of contacts for some of the major retailers that offer gift cards and outlines what a consumer should do when they encounter a gift card scam.

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